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CACI Scales New 52-week High - Analyst Blog

Shares of technical services provider
CACI International
(
CACI
) scaled a new 52-week high of $74.27 on the last day of the
just-concluded year, before closing the trading session a notch
lower at $73.22 for a healthy yearly return of 28.8%. CACI's
share prices have steadily been on the uptrend from Feb 2013.

Despite its strong price appreciation, this Zacks Rank #3 (Hold)
stock still has enough fundamentals that may further drive the
stock upward. The stock is currently trading at a forward P/E of
12.5x and has long-term earnings growth expectation of 14.0%.

Growth Drivers

Strategic acquisitions, new business initiatives and operational
excellence are the primary driving factors for CACI.

On Nov 15, 2013, CACI closed the $820 million acquisition of Six3
Systems, Inc. in cash, which is in one of the largest
transactions of its kind in history. With approximately 1,600
employees and expected revenues of $470 million in 2013, the
acquisition expands CACI's addressable market by approximately
$15 billion. Furthermore, Six3 Systems adds distinctive
cyberspace, C4ISR (Command, Control, Communications, Computers,
Intelligence, Surveillance and Reconnaissance), and intelligence
capabilities to CACI solutions and services and augments its
customer base. CACI expects the acquisition to be at least 5% and
10% accretive to GAAP and adjusted earnings, respectively, for
calendar year 2014.

The company has a large pipeline of new projects and continues to
win deals at regular intervals. These back-to-back contract wins
are the key catalysts for the company. Furthermore, having the
government as a big client lends stability to the business and
moderates fluctuations in revenues.

In addition, CACI intends to drive operational excellence by
intensively focusing on its organic and inorganic growth strategy
and strengthening its existing customer relationships while
building newer ones.

Estimate Revisions

Over the last 7 days, the earnings estimates did not show any
upward or downward revision for 2013. Although there is a lacuna
of estimate revisions, we envision an uptrend for the stock
backed by its strong growth potential.

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